One challenge with writing about vast multinational corporations that have unfathomably large user bases is that they occasionally wade into subjects that I personally know nothing about. For example, the Indian telecom market, in which Facebook is now a significant player. Late on Tuesday, the company announced that it had invested $5.7 billion in Jio Platforms Limited, making it the company’s largest minority shareholder.
If you live outside of India and are not particularly interested in who owns which piece of what mobile carrier, I understand why you may find your eyes beginning to glaze over here. Big companies invest in other big companies all the time. And we’ve got this whole global pandemic thing going on. Sure, this is the biggest check Facebook has written since it bought WhatsApp in 2014. But why should we pay any attention to Facebook buying 9.99 percent of a mobile carrier?
One, India is one of the world’s biggest markets, and the extent to which Facebook succeeds there could determine much of its medium-term future. Two, Facebook’s history in India is complicated, as an effort to provide free Facebook access drew criticism from net neutrality activists and led to complaints of digital colonialism.
Finally, and maybe most importantly, the world is in chaos. And if you’re a chaos-is-a-ladder person, then it’s always interesting to see which bets companies make when everything around them is in flames.
Ben Thompson has a beautifully concise history of Jio at Stratechery that helps to explain why Facebook would see it as a kindred spirit. Mukesh Ambani, the richest man in India, invested heavily in building a 4G network that leapfrogged existing 2G and 3G networks to provide dirt-cheap voice and data plans to hundreds of millions of customers. Thompson writes:
To put it another way, Jio was a bet on zero marginal costs — or, at a minimum, drastically lower marginal costs than its competitors. This meant that the optimal strategy was — you know what is coming! — to spend a massive amount of money up front and then seek to serve the greatest number of consumers in order to get maximum leverage on that up-front investment.
That is exactly what Jio did: it spent that $32 billion building a network that covered all of India, launched with an offer for three months of free data and free voice, and once that was up, kept the free voice offering permanently while charging only a couple of bucks for data by the gigabyte. It was the classic Silicon Valley bet: spend money up front, then make it up on volume because of a superior cost structure enabled by the zero-margin nature of technology.
This is also, of course, how Facebook is structured, though the company makes most of its money by showing ads to its customers rather than charging them subscriptions. But the result is a service that has brought hundreds of millions of Indians online — and, as Thompson notes, Jio has brought them the full internet, rather than the pocket version offered by Facebook’s old Free Basics plan. (Which India banned in 2016 for violating net neutrality.)
Stories about this deal all take a run at explaining how both companies will profit from it. Jio gets a lot money to lengthen its runway. And Facebook gets a powerful political ally in the well connected Ambani, plus some new options related to commerce. Much of the speculation focuses on how Facebook might use WhatsApp, which has 400 million users in India but doesn’t yet generate much revenue. Here’s Newley Purnell’s take in the Wall Street Journal:
Access to the platform could be a boon for Jio as it pushes forward with an ambitious plan to dominate e-commerce in the rural regions where most Indians live and it is trying to partner with millions of India’s small mom-and-pop grocery stores. Consumers, for example, could use WhatsApp to purchase products from neighborhood shops, which Jio has been signing up via low-cost point-of-sale machines.
“E-commerce will happen in a very localized way” in rural India, said Tarun Pathak, an analyst with research firm Counterpoint. It will happen not on PCs but on inexpensive smartphones and, “The familiarity is there for WhatsApp,” he said. “It makes sense.”
In Bloomberg, Andy Mukherjee and Tim Culpan speculate that a close partnership between a carrier and WhatsApp could turn the messenger into a WeChat-style “superapp” — long a dream of Facebook’s, and one that has so far gone unrealized. They write:
Customers in China and Indonesia have shown a preference for superapps, which allow people to interact with an umbrella brand for everything from chatting with friends to booking cabs and managing money. Ambani could be best-suited to try the model in India, especially if he gets to build it around the popular WhatsApp.
Of course, people have their concerns. India’s Internet Freedom Foundation warned of the possibly anti-competitive effect that bringing Jio and Facebook together might have. Nicholas Dawes has a thread about the entanglements with the Indian government that this new arrangement could bring. It all bears watching.
Earlier this week, I noted that Facebook had found new ways during the pandemic to push its core strategic message: that its vast size and free-speech ethos are good for the world. With its investment in Jio at a deeply uncertain time, we find Facebook pressing its advantage in a whole new way.
I was delighted that so many of you could attend yesterday’s Interface Live with Sarah Frier, the author of No Filter: The Inside Story of Instagram. For those of you who missed out, our conversation is now available as a special episode of The Vergecast, which you can find available on your platform of choice here.
Today in news that could affect public perception of the big tech platforms.
⬆️ Trending up: Zoom rolled out a new version of its software that fixes many of the security flaws highlighted in recent months. There’s now a security icon that allows people to quickly lock meetings, remove participants, and restrict screen sharing and chatting in meetings.
⬇️ Trending down: Amazon fired another warehouse employee who protested against the company’s working conditions. The company continues to garner intense criticism for its treatment of warehouse workers during the coronavirus pandemic.
⭐ A person who died at home in Santa Clara County on February 6th had COVID-19. The discovery makes them the first recorded coronavirus fatality in the United States, and adds to evidence that the virus was in the country much earlier than was previously thought. Erin Allday and Matt Kawahara at the San Francisco Chronicle report:
Santa Clara County on Tuesday announced three previously unidentified deaths from the coronavirus: the Feb. 6 case; one on Feb. 17, which also predates the death that was earlier believed to be the first; and one on March 6. Initially, the first death in the county had been reported March 9.
“What it means is we had coronavirus circulating in the community much earlier than we had documented and much earlier than we had thought,” said Dr. Sara Cody, Santa Clara County’s public health officer. “Those deaths probably represent many, many more infections. And so there had to be chains of transmission that go back much earlier.”
⭐ Palantir, the data-mining firm founded by Peter Thiel, is working with the Department of Health and Human Services to help the federal government create a new coronavirus data platform. The platform will help administration officials determine how to “mitigate and prevent spread” of COVID-19. Erin Banco and Spencer Ackerman at the Daily Beast have the story:
Palantir’s involvement in the creation of a new government coronavirus data platform system underscores the Trump administration’s reliance on close political allies of the president to respond to the global pandemic. Thiel was Trump’s earliest and highest-profile backer in Silicon Valley, and delivered a prime-time speech at the 2016 Republican National Convention. A top donor to conservative causes and the first outside investor in Facebook, Thiel was, according to The Wall Street Journal, instrumental in pushing the social networking giant to allow politicians to lie in advertisements on the platform. It’s a policy that many outside observers believe will help the Trump campaign—which Thiel has again pledged to support.
At least seven people got COVID-19 during Wisconsin’s primary election on April 7th. The news confirms fears that holding in-person voting during the health crisis put people at risk. (Amanda Becker / Reuters)
US officials say the viral text message that falsely claimed President Trump was going to order a national lockdown was amplified by Chinese operatives. It’s the latest coronavirus myth linked to the Chinese government. (Edward Wong, Matthew Rosenberg and Julian E. Barnes / The New York Times)
A group of Iran-linked Twitter and Instagram accounts aggressively pushed for California to secede from the United States in a disinformation campaign intended to sow discord. While coronavirus wasn’t explicitly mentioned, the campaign seemed designed to exploit fear and weakness during the pandemic. (Megha Rajagopalan / BuzzFeed)
Courts are moving to Zoom due to the ongoing pandemic. Critics worry that could make the justice system less transparent. (Zoe Schiffer / The Verge)
Zoom was supposed to turn people into slobs. Instead, it’s made some much more conscious of their appearance, because they’re spending all day staring into a camera. (Zoë Bernard / The Information)
YouTube says views of “authoritative” news videos have jumped 75 percent since the start of the year. The videos come from legitimate news outlets, government agencies, and health authorities like the World Health Organization. The obvious follow-up question: how are view of absolute nonsense conspiracy theories doing at YouTube right now? (Richard Nieva / CNET)
In a viral essay, venture capitalist Marc Andreessen wrote that the coronavirus crisis is partly due to “our widespread inability to build.” But the institutions through which Americans build — federal, state, and local governments — have gotten used to vetoing projects, not voting for them, Ezra Klein writes at Vox.
Patreon laid off 30 employees due to economic hardships created by the coronavirus pandemic. That’s 13 percent of the company’s staff. (Jay Peters / The Verge)
Magic Leap is cutting about half of its workforce (roughly 1,000 employees) as part of a major restructuring during the COVID-19 crisis. The augmented-reality startup raised more than $2 billion from high-profile investors including Alphabet and Alibaba. After hyping itself up as a once-in-a-generation company, Mag Leaps is now getting out of the consumer business. (Ed Hammond / Bloomberg)
Startups in India are deferring IPO plans, cutting investment round sizes and accepting unfavorable bridge rounds amid the COVID-19 pandemic. The next two quarters are expected to be especially painful for many companies. (Aditi Shrivastava / ET Tech)
Total cases in the US: At least 822,239
Total deaths in the US: More than 41,000
Reported cases in California: 35,974
Reported cases in New York: 257,246
Reported cases in New Jersey: 95,865
Reported cases in Massachusetts: 41,199
The kid who created the fake candidate running for congress in order to test Twitter’s verification policy wrote an essay about why he did it. “If I could do this with little time and money, imagine what a highly-skilled team of people looking to do actual damage could do,” he wrote. Probably a lot!
Instagram is speeding up plans for a new account memorialization feature due to COVID-19 deaths. The company is adding a “Remembering” banner under a username to signal that a person has died. (Katie Notopoulos / BuzzFeed)
Facebook is launching its Messenger Kids app in over 70 new countries today. The company listed Brazil, India, Japan, and New Zealand among the countries where the kid-focused messaging service is now available. (Jon Porter / The Verge)
On Sunday, Zoom is also rolling out a feature to let people report Zoombombing incidents in real time. The feature will generate a report to help Zoom decide if the attacker should be blocked from the platform. (Michael Kan / Mashable)
Amazon-owned home surveillance company Ring is surveying customers about adding license plate scanning and facial recognition capabilities to its consumer products. The company distributed a confidential survey to beta testers to gauge demand for the features. (Kate Cox / Ars Technica)
Google is starting to roll out a feature that lets users customize voice detection sensitivity on Google Assistant devices. With it, people can increase or decrease the sensitivity with which Google Assistant devices pick up the command “Hey Google.” (Taylor Lyles / The Verge)
The mother of a large baby who went viral on TikTok wants people to stop being so mean. (Cameron Wilson / BuzzFeed)
Things to do
Stuff to occupy you online during the quarantine.
Sign up for a virtual scavenger hunt taking place on May 2nd. Teams of five compete by solving riddles and playing games, with 10 percent of proceeds going to COVID-19 relief efforts.
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